Preferred stocks and related exchange traded funds retreated along with other income-generating assets as U.S. yields spiked in response to the Federal Reserve’s tighter monetary policy, but the asset ...

Exchange traded funds, including the SPDR Wells Fargo Preferred Stock ETF (NYSE: PSK), have made preferred stocks more accessible to a broader swath of investors. PSK, which targets the Wells Fargo Hybrid and Preferred Securities Aggregate Index, is home to nearly $690 million in assets and is up about 8 percent year to date. Preferreds are commonly viewed as hybrid securities that have qualities of both bonds and stocks, though the asset class probably less have an equity feel than some fixed income segments, such as convertible bonds.

Preferred stocks pay dividends to shareholders before they pay dividends to holders of common stock. The dividend rate is fixed. In the event a company liquidates, holders of preferred stock receive distributions first.